John Paulson is perhaps the most famous crypto bear. The billionaire investor famously made billions betting against subprime mortgages before the financial crisis and has been warning about a coming “token market crash” ever since. Now that the third-largest digital currency has fallen by more than 75% from its peak in early January, making it one of the worst-performing significant cryptocurrencies of all time, Paulson seems vindicated.

In an interview with CNBC on Wednesday, John Paulson said he still won’t short bitcoin or other primary digital tokens because they don’t have any intrinsic value. Instead, they are just a fad and a bubble, a worthless piece of technology that will crash and burn soon and publicly.

Bitcoin and other major digital token price collapses

John Paulson pointed out that bitcoin has fallen 85% from its December 2017 peak. That is a steeper decline than the Nasdaq composite index’s 78% drop from its 2000 peak, making bitcoin “the single worst investment that an individual can make.” In contrast, gold has fallen less than 1% from its 2011 peak. Paulson expects the rest of the crypto market to follow bitcoin’s lead. “It’s going to be similar to these other tokens. They are going to go to zero. The technology here is just worthless.”

In other words, Paulson is not worried that the overall blockchain industry will survive the collapse of the crypto bubble. Instead, the blockchain itself will be fine, but the hype around bitcoin and other digital tokens will be dead.

Blockchain Is Not the Problem

One of the biggest myths about the crypto crash is that the blockchain is the problem. In reality, the blockchain is a spectacular new technology, a globally distributed digital ledger with built-in security protocols and a robust decentralized network. It is an innovation that could fundamentally change how human beings organize society and run their businesses. Since the blockchain is a new technology, comparing it to past creations is the only way to assess its value.

In that respect, the blockchain is vastly more valuable than the internet. Whereas the internet gave us new ways to communicate and organize information, the blockchain gives us a new way to accumulate and store value. The blockchain is a decentralized, transparent, and highly secure ledger. It is also permissionless, meaning anybody can use it to record information and store value. This combination of features means that the blockchain can be used to create a new type of digital money, a token, that is much more robust and secure than paper or metal money.

Digital Tokens Are Worthless

John Paulson is correct that bitcoin and most digital tokens have no intrinsic value. But that is also the case for most digital information. If you were to create a new digital music sheet and add it to the internet, nobody would pay you for it. Nobody would pay you for a recent article, a new image, or a new video. It’s not that digital content has no value, but it has no exchange value, meaning nobody is willing to trade any tangible value for it.

To be sure, people will read your articles, listen to your music, and watch your videos; they will derive some non-monetary value from that content. But they won’t pay you any money for it. The exchange value of information, including digital content, is zero. And that’s why most digital tokens have a zero exchange value and, therefore, zero intrinsic value. That doesn’t mean that these tokens are worthless — some of them have immense non-monetary value. But it does mean that they have no inherent value.

Conclusion

The crypto crash is not a sign that blockchain technology itself is worthless. The impact indicates that many people make lots of money from the blockchain. That’s because the blockchain is a decentralized network that allows anybody to write computer code and create digital tokens, including the crypto tokens that are crashing. That’s why the overall crypto market has fallen by more than 80% since its January peak, but the general blockchain industry has grown by almost 50%. That doesn’t mean that you should jump into the token market.

Many tokens are worthless and will soon be worthless. But other tickets are valuable and will survive the crash. Because the long-term potential of the blockchain is so great, even a short-term token impact is not a reason to panic or abandon this revolutionary technology.